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Insurance

Mandatory coverage

What maritime risks must be covered under the law and what is the mandatory level of coverage?

The Merchant Shipping Act contains a number of provisions prescribing mandatory insurance coverage for both the shipowner and the registered owner.

Pursuant to Chapter 7a of the Merchant Shipping Act, the owner of a Danish-flagged vessel with a gross registered tonnage of 300 or above must have protection and indemnity (P&I) insurance covering maritime claims. Further, the insurance certificate must be carried on board and be shown to authorities on demand. The insurance requirement applies equally to foreign-flagged vessels with a gross tonnage of 300 or above when calling on or departing from Danish ports or any other loading or unloading facility in Denmark or on the Danish continental shelf.

Under Chapter 9a, which incorporates the Bunkers Convention 2001, the registered owner of Danish-flagged vessel with a gross register tonnage of 1,000 or above must have insurance covering claims arising out of pollution damage caused by bunker oil. The insurance must cover claims under Section 183 of the Merchant Shipping Act and the global limitation rules under Section 175 of the Merchant Shipping Act. The compulsory insurance applies equally to foreign vessels with a gross register tonnage of 1,000 or above, calling at or sailing from ports or other loading or discharging locations in Denmark or on the Danish continental shelf.

Chapter 10 incorporates the Civil Liability Convention for Oil Pollution Damage. The registered owner of Danish-flagged vessel carrying oil in bulk with a gross register tonnage of 2,000 or above must have insurance covering claims under Section 191 of the Merchant Shipping Act and the special limitation rules under Section 194 of the Merchant Shipping Act. A certificate must be issued as evidence of this insurance. In the absence thereof, operation of the vessel is prohibited. The duty applies correspondingly to foreign ships carrying 2,000 tonnes of oil in bulk as cargo when calling at or sailing from ports or other loading or discharging sectors in Denmark or on the Danish continental shelf.

Insurable risks and ships

What other risks are typically covered by marine insurance contracts concluded in your jurisdiction and what ships are insurable?

The individual types of insurance include cargo insurance, P&I and hull and machinery insurance, which encompasses:

  • total loss insurance;
  • war risk insurance; and
  • loss of hire insurance.

Marine perils in hull insurance effected under the Nordic Plan cover all perils to which the ship may be exposed, with the exceptions listed in Sections 2-8(a)-(d). Therefore, compared to marine insurance policies effected on English terms, the Nordic Plan is based on the ‘all risks principle’ (ie, all risks are covered unless specifically excluded).

Insurance may be effected for ocean-going ships, fishing vessels, small freighters and mobile offshore units. Further, a builder’s risk insurance can be effected under the plan (ie, newbuildings and the rebuilding of ships).

Subrogation rights

What is the legal regime governing marine insurers’ subrogation rights?

Subrogation in insurance relations is governed by the general rule in Section 22 of the Tortious Liability Act, which stipulates that to the extent the insurer has paid out in connection with a damage covered by the insurance, the insurer subrogates into the assured’s claim against a tortfeasor. 

Marine accidents

Collision and pollution

What rules and procedures (under both domestic and international law) apply to the prevention of, liability for and remedy of:

(a) Collision?

Denmark is a party to the Convention for the Unification of Certain Rules of Law with respect to Collisions between Vessels 1910.

Denmark has adopted national rules based on the 1910 convention on the liability of ships in cases of collision (see Section 161 of the Merchant Shipping Act). Pursuant to this section, a ship at fault is liable to compensate the damage or lossthereby caused. Compensation must be paid for all losses arising from the collision. This includes damage to the other ship, its cargo and its passengers. A ship at fault may also be liable towards its own cargo or passengers; however, these issues are decided in accordance with the transport rules (contracts) applicable between the vessel owner and cargo interest or the involved passengers.

If both vessels involved in a collision are at fault, the losses will be allocated based on the blame accorded to each ship (see Section 161(2) of the Merchant Shipping Act). If the collision is not the result of negligence on the part of any of the ships involved, each party must bear its own losses. 

(b) Oil pollution?

Denmark is party to the Civil Liability Convention 1992, the Fund Convention 1992 and the Fund Protocol 2003. These regulations have been incorporated into Chapter 10 of the Merchant Shipping Act.

Pursuant to Section 191(1) of the Merchant Shipping Act, a shipowner is liable without fault (strict liability) for oil pollution damage arising from the escape or discharge of persistent mineral oil from a ship carrying oil in bulk. Pursuant to Section 193 of the Merchant Shipping Act, claims for oil pollution damage can be made only against the registered owner of the particular vessel causing pollution.

Pollution damage caused by bunker oil from ships not carrying oil in bulk is governed by Chapter 9a of the Merchant Shipping Act, which incorporates into Danish law the rules of the International Convention on Civil Liability for Bunker Oil Pollution Damage (2001), to which Denmark is a party. 

(c) Other environmental damage caused by a ship?

Denmark has ratified the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea 1996 and prepared an incorporation of the convention rules into the Merchant Shipping Act. However, until this legislation enters into force, liability for pollution damage not caused by bunker oil or the escape or discharge of persistent mineral oil from a ship carrying oil in bulk is governed by the Act on the Environment of the Sea. Pursuant to Section 47 of this act, the operator of a ship is liable without fault for any pollution damage caused by a ship. The ‘operator’ is defined as the party liable for the operation of the ship. In most instances, the owner will also be considered to be the operator. However, if the vessel is on a bareboat charter, the charterer will be considered to be the operator. If the operator cannot be identified or is unable to settle a claim for compensation, claims may be directed against the registered owner of the vessel, regardless of whether he or she was actually the responsible operator of the ship when the pollution was caused. 

Salvage

What is the legal regime governing salvage and general average?

Denmark has incorporated the International Convention on Salvage 1989 into Chapter 16 of the Merchant Shipping Act.

The New York-Antwerp Rules 1990 have been incorporated into Danish national law (see Chapter 17 of the Merchant Shipping Act).

Places of refuge

What framework governs access to places of refuge for ships in distress?

The Ministry of Environment and Food has designated 21 places of refuge for ships in distress under Executive Order 875/2016. The coordinates are enumerated in Appendix 1 to the executive order and the areas have been designated in accordance with Article 20 of Directive 2002/58/EC and International Maritime Organisation Resolutions A 949(23) and A950(23).

Wreck removal

What rules and procedures apply to the removal of wrecks in your jurisdiction?

Pursuant to Section 166(1) of the Merchant Shipping Act, the registered owner of a sunken vessel is, without fault, liable to pay costs and expenses in relation to finding, marking and removing the wreck. The rule corresponds to the Nairobi International Convention on the Removal of Wrecks.

However, in order to recover such costs from the owner, the costs must have been incurred due to a risk to navigation. Liability for wreck removal and other clean-up costs arising out of maritime accidents is generally subject to limitation under the Limitation of Liability for Maritime Claims 1976 (LLMC) and the Protocol of 1996 to amend the Convention on Limitation of Liability for Maritime Claims of November 19 1976 (LLMC Protocol). Under the LLMC Protocol, parties can reserve the right to exclude liability for clean-up costs from the scope of the LLMC Protocol, which a number of states have done. However, this approach has not been taken by Denmark.

Under what circumstances can the authorities order removal of wreckage?

If the wreck is deemed to pose a threat to the coast or a coast-protection facility, the minister of environment and food or the municipal authority board may order the owner to remove the wreck (see Section 19(e) of the Coastal Protection Act).

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